For Immediate Release - October 02, 2006

Consumer Alert: Guidance for a Mortgage Loan Transaction

Consumer Alert: Guidance for a Mortgage Loan Transaction

As a result of some recent deceptive mortgage practices, consumers have found themselves in substantial financial trouble. It is advisable for any consumer to protect their interests in a mortgage loan transaction. Here are some do's and don'ts to be aware of during the entire process from application to closing. Above all, you should be an active participant in the mortgage process.

Do Not :

  • Sign blank or incomplete loan documents.
  • Sign loan documents or loan closing documents without reading and understanding the documents.
  • Sign loan documents or loan closing documents which you know include false information about your income and assets or employment.
  • Be pressured into signing loan documents which do not reflect the interest rate or loan amount you agreed to.
  • Sign an agreement today based on a promise that the loan will be refinanced in a few months or that the paperwork will change later.
  • Buy a home which you know you can't afford.
  • Rely on the bank or lender's attorney to protect your interests.

Do :

  • Know the full cost of home ownership, which include monthly payments of principal, interest on the loan, taxes on the home, insurance on the home, water and sewer charges, other utilities such a gas or electric bills as well as necessary funds for repairs.
  • Comparison shop with more than one entity to determine the best rate, terms, and product that may be available to you.
  • Know that the entity you are dealing with is either a chartered institution or licensed by the Division to act as a mortgage broker or mortgage lender in the Commonwealth. The Division's Consumer Mortgage Hotline is available to provide this information at (800) 495-2265, extension 1501.
  • Obtain a translator if you do not understand the documents due to English not being your first language.
  • Know that signing documents binds you to the terms of the loan contract.
  • Hire your own attorney to review the purchase and sale agreement and to represent you at the loan closing.
  • Ask questions of the real estate broker, mortgage broker or mortgage lender during the home buying process.
  • Demand answers which you understand from the mortgage broker, mortgage lender or real estate broker.

If you have other mortgage or banking questions, always feel free to contact the Massachusetts Division of Banks' Consumer Mortgage Hotline at 1 (800) 495-2265, extension 1501.